Views Article – Sharenet Wealth

Europe, Forex

Stocks rise on stimulus hopes, investors await signals

By Alan Charlish WARSAW, Aug 19 (Reuters) – Central European stocks and bond yields rose on Monday, as investors eyed the prospect of fiscal stimulus in Germany and looked ahead to a week heavy with central bank events. U.S. Federal Reserve Chairman Jerome Powell is due to make a speech on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming, while investors will also be paying attention to minutes from the European Central Bank (ECB) and the Fed this week. At 0849 GMT Polish 10-year yields were almost 10 basis points higher at 1.819%, while Czech 10-year yields were 3 basis points higher at 0.971%. Some analysts said bond prices may be correcting after their rally last week was seen as overdone. “The market was very bullish in the last weeks. Now there is profit taking because of the fiscal stimulus in Germany and probably the overpriced risk of a slowdown,” said ING Chief Economist Rafal Benecki. The region’s major stock markets were higher, with Warsaw’s WIG 20 index up 1.38% at 0854 GMT and Prague’s PX index up 0.31%. Stock markets globally have been boosted by signs of stimulus in Germany and China. Germany has the fiscal strength to counter any future economic crisis “with full force”, Finance Minister Olaf Scholz said on Sunday, suggesting Berlin could make available up to 50 billion euros ($56 billion) of extra spending. Meanwhile, China took steps to guide interest rates for companies lower, aiming to prop up a flagging economy. Currencies eased after rallying on Friday at the end of a week that had seen the Polish zloty, the region’s most liquid currency, hitting its lowest point in over a year in an illiquid market as local banks closed for a public holiday. At 0909 GMT the zloty had weakened 0.39% against the euro to be bid at 4.3528. The Hungarian forint was 0.32% weaker at 325.45 and the Czech crown was 0.11% weaker at 25.756. “The rebound might have been too strong… we’re back to the levels from before the market stress,” said Santander Bank Polska economist Grzegorz Ogonek, talking about the zloty. CEE SNAPSHOT AT MARKETS 1118 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech 25.7710 25.7310 -0.16% -0.25% crown Hungary 325.3500 324.8000 -0.17% -1.31% forint Polish 4.3537 4.3354 -0.42% -1.47% zloty Romanian 4.7290 4.7300 +0.02% -1.59% leu Croatian 7.3870 7.3885 +0.02% +0.31% kuna Serbian 117.8200 117.8300 +0.01% +0.41% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1036.25 1035.460 +0.08% +5.04% 0 Budapest 40005.90 40005.90 +0.00% +2.22% Warsaw 2094.35 2064.12 +1.46% -8.01% Bucharest 9027.47 9035.27 -0.09% +22.26% Ljubljana 863.79 863.18 +0.07% +7.40% Zagreb 1886.11 1882.97 +0.17% +7.85% Belgrade <.BELEX15 743.91 744.72 -0.11% -2.33% > Sofia 572.49 575.10 -0.45% -3.70% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.0730 0.0330 +197bps +3bps > 5-year <CZ5YT=RR 0.7670 0.0200 +167bps +0bps > 10-year <CZ10YT=R 0.9910 0.0540 +164bps +2bps R> Poland 2-year <PL2YT=RR 1.4990 0.0100 +239bps +0bps > 5-year <PL5YT=RR 1.7620 0.2840 +266bps +27bps > 10-year <PL10YT=R 2.0970 0.3760 +274bps +34bps R> FORWARD RATE AGREEMEN T 3×6 6×9 9×12 3M interban k Czech Rep < 2.06 1.82 1.64 2.14 PRIBOR=> Hungary < 0.34 0.40 0.45 0.26 BUBOR=> Poland < 1.70 1.62 1.55 1.72 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Alan Charlish; Editing by Susan Fenton)

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